Good day, everyone, and welcome to the Full House Resorts’ Fourth Quarter Earnings Call. Today's call is being recorded. At this time, I would like to turn the conference over to Lewis Fanger, Chief Financial Officer of Full House Resorts. You may begin, sir.

Thank you. Good afternoon, everyone. Welcome to our fourth quarter earnings call. As always before we begin, we'll remind you that today's conference call may contain forward-looking statements that we're making under the Safe Harbor provision of federal security laws. I'd also like to remind you that the Company's actual results could differ materially from the anticipated results in these forward-looking statements. Please see today's press release under the caption Forward-Looking Statements for the discussion of risks that may affect our results. Also, we may make reference to non-GAAP measures, such as adjusted EBITDA. For a reconciliation of those measures, please see our website as well as our various press releases that we issue including today. And lastly, we're also broadcasting this conference call at fullhouseresorts.com, where you can find today's earnings release as well as our SEC filings. And we actually just posted a few minutes ago the latest running for Bronco Billy's expansion. So with all that said, we are ready to go. Dan?

All right. I mean, well obviously, it wasn't a great quarter. I hate to the blame weather, but sometimes the weather matters. Most significantly in this quarter Hurricane Nate went directly over the Silver Slipper. And it actually affected us for most of the week. I mean, we were closed for a good chunk of the weekend and actually had to evacuate the hotel because we're kind of end of the powerline and at the end of a single road. And if the road floods where the power goes out, we have light safety issues at the hotel. The other casinos didn't, for the most part, have to evacuate. But we knew the storm was coming, and that was a key weekend and it's normally when there's a big cruising on the coast, car rally with tens of thousands of people. And midweek, leading into that the weekend, all that was canceled. The mayor told people to please leave town, the hurricane was coming and the hurricane actually came right over us and then moved on. And it actually did very little property damage to us. We got a little salt water in the swimming pools, that's about it. But it hurt our business quite a bit. And then we had a lack of snow in Tahoe, the other end of the country. It's snowing now big time. Interstate 80 closed about 1.5 hours ago. They're expecting to get one to three feet at Incline Village and about five feet [indiscernible] and it's way fast time. I mean, I drove over splinter summer last weekend, just one of the passes leading in Incline Village last week not last weekend. And a year ago, it probably had 10 feet of snow on it and this year it had green grass, which…

No, Daniel, the other thing is we have a brand new debt.

Yes, please. Talk about that. That's actually really important.

So on February, we effectively refinanced all of our first and second lien debt with our brand-new senior secured notes, very excited to have those in place. We have a great group of new lenders. Our interest rate just based off of current rates will stay in the ballpark of $1.2 million this year just on interest expense alone. There is also the mandatory amortization that happens every quarter. And under our old facility, we were paying about $563,000 a quarter until July 1 of this year when it was going to go up about $844,000. Under our new notes, it's $250,000 a quarter. So it's significantly less there, and we'll use some of those savings to plow into some of these projects and to these growth projects. So very excited there.

Well, it’s actually equally important, the lenders in this are big blue-chip firms. Are we allowed to say the names of the firms?

Some people have figured it out from the signature pages and the indenture.

Okay. One is to guard which is part of the Power Corporation of Canada [indiscernible] among other things. But the largest is actually PIMCO. I think it's the largest single bond fund in the world. And then the third one was. That's right. And for these really big firms, they normally wouldn't do a deal this small or the company this small. And I think part of what attracted them to it is they know that we want to finance this project at Cripple Creek and so the deal is structured in a way that's pretty easy for us to do add-on notes. There's no certainty that they will agree to buy those notes, but it's structured so it's easy to do once we have provided to them forecasts and construction contracts and all that stuff. And recognize it's much better to have lenders who are griping about how small their exposure is versus a real deal which had a bunch of tiny banks on it were always griping about how big their exposure was to us. And so that was a pretty important deal for us in many different levels. If there's there anything else, I might look around the table here.

I think we are good. You want to do some Q&A, Dan?

Sure.

We’ll take some questions.

By the way, I saw 4,000 shares of our stock traded today [indiscernible] can’t buy some stock. The stock doesn't trade much. That would explain some of the volatility.

[Operator Instructions] First we’ll take Chad Beynon from Macquarie Securities. Your line is open.

Hi, good afternoon. How are you?

Good. How are you?

Good. Congrats on the debt deal, very attractive rates, great to see that that's over the goal line. So with that kind of behind you and you've outlined the Cripple Creek project and we've seen the renderings then and you project a 2020 opening, if everything goes as planned. How do you think about the returns on an asset like that versus potentially acquiring some of the smaller assets that all of your regional gaming peers are looking to divest and really just bring in the current EBITDA plus the synergies and have good current free cash flow versus a bigger projects like a Cripple Creek, which will take a lot more time design, maybe have a little bit more risk and open in a couple years? Thanks.

Yes, good question. When I look at these projects at least my head, I'm usually looking for about a 15% cash and cash return. And so we invest $5 million in something we expect to make [$50 million] in cash flow of it going forward. And when I look at stuff being bought and sold, it’s nine, 10 and 11 times cash flow. And in a lot of cases, they might be buying the stock of a Company and getting the reduced tax basis. So they don't get the full tax shelter as when you build something new, you get accelerated depreciation on it. So the returns are even better than that. If you take the inverse of 15%, it's like a fixed multiple. In the new asset, there is more risk, no question. But I think the extra return we hope to get offsets that risk. Now that doesn't mean we wouldn't acquire something, after all we did acquire Cripple Creek and we bought it for $30 million that $4.8 million last year last year in EBDIT, when we bought it, we had assumed $5 million that we were a little bit off, but not much. And that that’s a pretty good multiple and on top of that, it had a great growth opportunity. We knew it had some excess land. Turned up the market, better market than we thought it was when we get into it. We started looking at the places like Blackhawk do. So we do look at acquisitions. If somebody wants to sell us something with good growth opportunity at six times cash flow will jump on it right away. And we do look at an awful lot of things. And some of them frankly are we've looked at some deals that were just –…

Chad on to that chasse. I'll tell you, there isn't today in fact there's a [indiscernible] right now for casino looking to get sold. So there's always stuff out there to buy, but I'll tell you when you look at this Bronco Billy's expansion, it to us is a bigger – the investment rationale for that project is bigger to us and better to us than we were at Pinnacle looking at what barriers to lock. When you look at the gaming spend metric that of Houston heading into Lake Charles and compare that to the national average, those numbers back in the day indicated pretty strongly that Houston was underserved. When we look at Colorado Springs in that broader market now with Bronco Billy's, it's even more underserved. And so I'll tell you, there's – the level of excitement that we have for that project is – I don't want to speak for you, Dan, but I would say it's probably unparalleled given our…

And frankly, the best of Pinnacle on the map, I think this one puts us in the map.

Yes.

Okay, yes, well said. And then moving down to Silver Slipper. You mentioned weather obviously impaired your results this quarter. You would have I guess three, maybe even four straight quarters of some really good growth. Outside of that incident that kind of weather weekend, was the business still humming along? And as we look at 2018, you mentioned obviously the new amenities that will help bring customers to the property. But is there any reason why we can't kind of return to some of the growth rates that we're seeing before the weather impaired the property?

Yes. I think it's still doing pretty well. If you back out the iffy weather. We had some rocky weather in January as well. But I would tell you last weekend was one of the best weekends in the history of the property. And the outlook for March is pretty good. So I think the property is doing just fine. And in fact, we have designed an expansion for it that if you've been to the property and I know you have, Chad, but for anybody else on the line, there's kind of an abandoned pier that sticks out into the Gulf of Mexico in front of us. And it was kind of demolished by Hurricane Katrina. So it's been there 15 years. It's a bit of an eyesore. And everything we have there is kind of squeezed in seven acres. And so we are designing with Brad Friedmutter, a hotel expansion that would go where that pier is. In other words, goes out over the water. And with that, we'd build some meeting rooms and conventional rooms which probably have none at the moment. And so that would help fill the new tower and also give us a place to host entertainment and stuff. That's a very long range process, because the water itself in that pier is owned by the state of Mississippi. And John Ferrucci and I went and met with the Secretary of State that kind of tick his spots on the idea of leasing us some bottom in the Mississippi for us to build a hotel tower. He's open to the idea. It also takes kind of Engineering permit, which we have a lot of experience with. We know it takes a long time. It takes a bunch of environmental approvals. And if we do…

To help make it a little more concrete for you Chad, this past Saturday, now that we're filing out of the big chiller as we call it around here, slot win was at its best in over four years. This past weekend, our guest counts were up 7% for this weekend, compared to prior year. So we feel good with these weather effects starting to disappear down there.

Great. Okay, the last one just going back to Cripple Creek, the process and so I don’t know if you want to handicap it on the line, but what would really be the reasons, while the city council would not want a project like this and Jobs and Tax revenues in the market. Are there other factors that we might not be aware off in terms of traffic congestion or something else or I don't know if you're willing to handicap it on the line or maybe just point out some of the reasons why the city would not want this to go through, just trying to figure out the probability of this going through?

Well, I handicap these things all the time like I've pointed out Terre Haute is something we're working on, but it's a long shot right, and we'll continue to work on it, but it's a long shot. This thing in Mississippi, I think we can eventually get permissions, but it's a long ways down the road. In Cripple Creek, this is a very fast process, I mean, it's a small town. This is exactly what the town needs. I think in general, it's what the people want. I have attended – I don't know half a dozen City Council meetings now. We have these public meetings. We're not allowed to talk directly to any of this City Council people under the laws and rules of Colorado I guess it is. But I mean I have ex-City Council people coming into me all the time, saying this is great. This is exactly what we need. And there really is no reason not to approve it. I mean the streets were seeking to close or streets that are not used anyway. One of them is an alley behind Bronco Billy's that has dumpsters and stuff on it, pretty all that up. The other one is Second Street, but half the time, Second Street is closed for a beer tent that we put up for different festivals and so on. So not used much anyway, the ordinance calls for buildings not to be more than five stories tall above the adjoining Historical Street, and then it lists a bunch of Historical Streets. And so we took that domain. We can be five stories above the Carr, have a hilly town and Carr is like 20-feet higher than Bennett. And so technically, the lobby of our hotel is a walkout basement of five-story building…

Okay. Very clear. Thank you, Dan. Thank you, Lewis, best of luck.

Thanks Chad.

[Operator Instructions] Next we will go Gary Ribe from MACRO Consulting. Your line is open.

Yes, hi, Dan, hi Lewis. How you guys doing?

Great.

I don’t think you guys mentioned this, but at some point on the last quarter you guys that filed fairly deepen size mixed shelf. And I’d just kind of curious, you mentioned kind of in the fall kind of getting going on Cripple Creek what time of capital structure, how might you effect that you might that expect to effect the capital structure and kind of what would the mix look like as you get going with that?

Don’t know the mix shelf was a little bit of the function of century casino as a competitor of ours in Cripple Creek and other smaller company. They're actually pretty similar to us in size, but they have more equity less debt, so they have a bigger market cap. And they had filed the shelf, and then several months later, they did an equity deal and raised that $30 million. And literally, I asked Lewis, are we big enough to file a shelf. And he came back and said you have to be $75 million at market cap, not including shares held by the board and the management. And we were just above that number. And so we ran out and file the shelf to get it on file when we qualified and thought that the SEC might give us a full review and stuff they reacted very quickly and approved in early January. We size that to be big enough that if we hadn't gotten there with the lenders of our new notes, we could have entertained doing bonds or something under the shelf as it turned out, we didn't have got there successfully and shelf stay out there for us to do stuff.

And as you know Gary that those were $100 million in size…

Yes, that’s a $100 in size. So that’s why the shelf is a big us it is. Now down the road again I this is tentative number of $100 million and what those think cost and Cripple Creek I would love to less both somewhere in that ballpark, when you go to advance that, we're pretty levered company I doubt we can do it follow with that. But we could probably do a lot of it, but will figure out where that markets are later this year. Do you do it with the shelf? We could do a combination of debt and equity. We can do equity. We can do a convert, just about anything. And it was – so we filed it just to have the flexibility to do publicly traded securities of any kind universal chef and the size that was structured if we had to do it to refinance at the old that we could.

And it's a three-year shelf as well, Gary, pretty standard. So if you wanted to the extreme, taking out these notes in three years, we could always do that with unregistered securities as well. So it was meant to be a little forward thinking, but also that encompasses our current debt.

Yes, I've even had a couple of overtures and whether we'd be willing to partner Bronco Billy's. And but I think when you go through that it's ultimately – that is good for our shareholders as it would be if we can do it on our own.

That makes complete sense. Thanks for the color on that. If you do need to raise some equity for Bronco Billy, I guess as a shareholder, being able to participate via rights offering or something might – I think you probably have good appetite among shareholder base?

I appreciate that. We did do a rights offering year and a half ago, which was pretty successful and I backstop it, and I think it worked up over everybody. And I hear that – we figure it out when – this is ways down the road. But that the real financing for Bronco Billy is a ways down the road figure it out in time. We keep right our stocks are so volatile. We were $4 a share when we filed the shelf. And we dropped almost to $3 a share, which percentage wise is a huge way.

Good job in everything else. That’s it for me. Thanks.

Yes, thank you. End of Q&A

And we have no further questions in the queue. I'd like to turn it back to Dan Lee for any closing remarks.

And actually, I'm just – two closing remarks, one is, we forgot to mention that we moved back the maturity date of the debt, so we are now from…?

From 2019 to 2024.

Okay. So Lewis is well-sleeping well at night lately. And then second, on the rights offering last time, it was only $5 million. So it was fairly small rights offering. But one of the down sets the rights offering is we don't introduce new shareholders, and at some point, we kind of like to maybe broaden the flood, and then when the stock on the trades 4,000 shares a day. We hear from all sorts of people saying, we'd love to buy your stock, but we can't seem to figure out how to get. And so you kind of juggle all those one against the other. I mean, even if you did do an underwritten public offering about the times you can do it the way that shareholders can still participate, but than the fees are higher, because they typically have an underwriter in all that stuff. So we weigh all those things. And I will point out I think other than institutions, I think I'm probably larger single shareholder. So I’m very motivated by figuring out what's best for shareholders, because I'm one of them. I guess that's it.

Daniel, go ahead.

All right. Thank you very much everybody. Take care.

And that concludes our call for today. Thank you for your participation. You may now disconnect.